The Strategic Allocation of Founder Time in Service-Oriented Businesses

In the dynamic landscape of business management, particularly within service-oriented enterprises, the allocation of a founder's time is a critical factor influencing both immediate performance and long-term sustainability. A common proposition in entrepreneurial circles is that founders should limit the time spent on activities not directly tied to billable services or clear revenue impacts to no more than 10%. This essay explores the rationale behind this strategic approach, evaluates its implications, and discusses alternative perspectives that might challenge this guideline.

The Case for Strategic Focus

At its core, the argument for founders dedicating a majority of their time to directly revenue-generating activities is rooted in economic efficiency and the urgent need for financial viability. Startups, especially those offering professional services, operate under tight financial constraints. Allocating more than 90% of a founder’s time to activities directly linked to generating revenue, such as client engagement, service development, and market expansion, ensures that limited resources are used effectively to build a strong economic foundation.

Billable services are the lifeblood of any service-oriented business. These activities not only generate immediate revenue but also help in establishing a client base and enhancing brand reputation. Direct involvement in these tasks allows founders to closely monitor service quality, receive instant client feedback, and quickly adapt offerings in alignment with market demands. This hands-on engagement is crucial during the initial stages of a business when the priority is to achieve a stable financial base and market position.

Indirect Activities and Their Impact on Revenue

While the emphasis on direct revenue activities is undeniably important, the proposition to limit time spent on non-billable tasks to 10% warrants a critical examination of what these activities entail and their potential impact on the business. Non-billable tasks often include strategic planning, networking, skill development, and internal management processes—activities that do not immediately translate into revenue but are essential for sustainable growth.

Strategic planning, for example, helps in setting long-term goals and aligning daily operations with these objectives. Networking can open doors to new client relationships, partnerships, and even potential investor connections. Additionally, investing time in skill development is not immediately billable but is crucial in maintaining competitive edge and innovating service delivery. Therefore, categorically limiting such activities to a mere 10% might pose a risk to the adaptability and growth potential of the business

.

Balancing Immediate and Long-Term Needs

The key challenge for founders is to strike a balance between tasks that offer immediate financial returns and those that build the foundation for future success. While prioritizing billable activities can ensure short-term survival, neglecting broader strategic and developmental activities can inhibit a company's ability to evolve with changing market conditions and technological advancements. The 10% guideline suggests a focus on short-term gains at the potential expense of long-term stability.

A more nuanced approach could involve a phased allocation of time. In the early stages of a startup, more than 90% of a founder’s time might indeed need to focus on billable activities to escape the so-called “valley of death”—the initial phase where many startups fail due to cash flow issues. As the business stabilizes, however, the founder could gradually increase the time spent on strategic non-billable tasks, which would contribute indirectly to revenue growth and business scaling.

Case Studies and Practical Observations

Examining successful service-oriented businesses reveals a variety of approaches. Some founders maintain a rigid adherence to the 10% guideline until their business reaches a significant scale, while others adopt a more flexible approach from the outset. For instance, tech service companies often invest heavily in research and development, a non-billable activity that is crucial for innovation and staying relevant in competitive markets. Similarly, consultancies might spend considerable time on thought leadership and content production, which, while not directly billable, establish authority and attract clients.

Conclusion

The proposition that founders should allocate no more than 10% of their time to non-billable tasks simplifies the complex decisions entrepreneurs must make about time management. While this guideline encourages efficiency and focus on financial health, it underestimates the importance of strategic, non-revenue activities in fostering long-term growth and resilience. A flexible, phase-dependent approach to time allocation allows founders to adapt to the needs of their business over time, balancing the urgent with the important, and securing both immediate survival and sustainable success.